Local investments save MISSA from further losses
posted 03/03/09
The latest report covering the first quarter of FY 2009 from Investor Solutions, Inc., MISSA’s Investment Advisor, remains dismal despite the $1.59 million investment gain MISSA had in December 2008.
For the month of December, every single equity traditional asset class was solidly positive, some with double digit returns. But such gain was overshadowed by significant losses in October and November that decreased further the fair market value of the Administration’s offshore investments by $6.84 million.
Despite the poor results, Frank Armstrong of Investor Solutions remains optimistic and emphasized some relatively good points:
The bond funds are solid and compared favorably with CD rates in the U.S. in 2008. The investment policy for fixed income of short term, high quality bonds proved its worth by avoiding the entire subprime mortgage and credit fiasco.
MISSA’s portfolio did not have concentrated positions in the equity accounts that crashed. Individual firms can crash and never recover, but whole markets come back.
While MISSA’s equity funds held financial institutions as part of their index, , MISSA held no “toxic” assets. There were no hedge funds, CDOs, CDs, or other illiquid, un-priced assets.
The entire structure of Investor Solutions’ service model is totally transparent, easily verifiable, constrained by a number of sensible business checks and balances, and all funds are subject to SEC registration and FINRA regulations. This is particularly important in the post Madoff era. His Ponzi scheme could never have happened where accounts were held at an independent third party custodian. (MISSA’s accounts are being held by Fidelity Investments IBG, an independent third party custodian.)
As of February 28, 2009, MISSA’s total investments stand at $46.69 million. This includes MISSA’s stock ownership of $8.17 million at the Bank of the Marshall Islands (BOMI) and another $4.55 million worth of TCDs earning 5% interest every year. MISSA also holds 3,000 shares of stock, at $10.00 par value, in the Marshall Islands Service Corporation (MISC).
MISSA’s initial 32% ownership of BOMI, RMI’s strongest and most profitable financial institution, started on February 19, 1999 when the RMI Government fully repaid a loan and related interest, totaling $1.94 million, through transferring its ownership of 94,485 shares of the BOMI stocks to MISSA. Later, 30,000 of these shares were sold to a third party that subsequently reduced MISSA’s shareholding to 31%.
Since MISSA’s acquisition of these shares, the Administration received dividends from BOMI amounting to about $1.2 million. (For calendar year 2007, MISSA received $0.29 million and at least another $0.30 million is expected for 2008.)